The resilience of Joe Lonsdale: How the cofounder of multibillion-dollar company Palantir was vilified in Silicon Valley, then bounced back
Joe Lonsdale was a little bit nervous as he shook my hand and flashed his trademark wide grin. His tall, broad-shouldered frame, in a white dress shirt and black dress slacks, towered over my 5-foot-3 self. No jeans. No hoodie. He dressed respectfully for this rare interview with a journalist.
We were on his home turf at his airy San Francisco offices, and he had A-list public-relations pro Dena Cook at his side. I got the impression that this moment sums up his personality perfectly: a ton of confidence thanks to smarts and preparation, mingled with a touch of nerves, the kind of nerves that make you want to step up to a challenge, not back down.
Lonsdale is like the living embodiment of Silicon Valley all rolled up into one person: young, smart, geeky, financially successful, optimistic, passionate, outspoken, and, at times, controversial, not to mention his involvement in some pretty scandalous lawsuits.
As a rule, he refuses to do interviews with the press. "I don't see the upside in it," he explained.
He made an exception for me after we met as speakers at a tech conference and had an enjoyable lunch together. Even so, it took months of pestering his people before his tentative "yes" turned into a date and time.
It's not that Lonsdale is shy of talking in public - he speaks often at tech conferences. And he's been known to write candid and insightful posts about himself on Quora, the online Q&A forum. For instance, he once answered the question "What's wrong with Joe Lonsdale's tongue?" about his occasional, noticeably odd jerky movements, often a facial twitch.
"I agree it is pretty weird - I think everyone is just being polite, but I don't mind the question," he wrote. "It's part of a twitch that seems to move around, and comes up a lot, and we haven't been able to figure out why but I've had some version of it since I was very young."
But Lonsdale's relationship with the press is complicated, and the stories about him have not always been kind.
The worst of it happened in 2015 when an ex-girlfriend sued him, alleging emotional and sexual abuse. The allegations fit into a troubling pattern of reports about discrimination and sexism in Silicon Valley, and the headlines publicly vilified Lonsdale. His alma mater, Stanford, where he had been a guest lecturer and where the woman had been a student, kicked him off campus. He countersued her for defamation and argued he had evidence that validated his innocence.
He was, ironically enough, also helped by the press, such as an in-depth story by The New York Times' Emily Bazelon that depicted his ex as an emotionally fragile woman, him as an awkward bro-type, and their relationship as something that wasn't particularly good for either of them.
Both suits were eventually dropped and Stanford removed its ban on him, but the damage to his reputation in 2015 was intense. In the backdrop of that, his VC firm, Formation 8, broke up. The partners had differing investing philosophies, and their personality conflicts were exacerbated by Lonsdale's public problems, reported Dan Primack at Fortune.
Flash forward two years, and Lonsdale, 34, is happy, and he considers himself "a lucky guy," a term he used repeatedly to describe his life to me.
He's the head of a new venture firm he founded, 8VC, run by five partners that's raised over $400 million. He's newly married to his long-term girlfriend, and the couple just welcomed their first child, a baby girl, into the world. He's even become known for his invite-only dinners. He has once again been embraced in Silicon Valley.
This is a story of resilience and the kind of second chances that Silicon Valley provides to a segment of its members, especially its young successful entrepreneurs turned power brokers.
And that's why he was wary of me on that sunny spring day as I sat in his leather couch and book-lined office. But as we talked, the nervousness faded. There was no twitch. Instead, Lonsdale and I had a candid discussion about:
- Growing up in Silicon Valley in an ultra-competitive family.
- What it felt like to fight against horrific public accusations.
- The freak circumstances that led to one of his startups saving his mother-in-law's life and possibly his wife's.
- His early years at the startup he cofounded, Palantir, and its reputation for secrecy.
- The most difficult year of his life. (It wasn't the one people think it is.)
- How success brings with it obligations to be a good person.
- Being a politically conservative contrarian in the Valley's decidedly liberal world.
Vilified in the press
Lonsdale is probably best known as one of the cofounders of Palantir, a big-data company that raised $2.8 billion in venture funding, is valued at $21 billion, and has a reputation for being super secretive. He's no longer with the company, although he's still named as an adviser.
While he's not technically a member of the powerful group of PayPal founders affectionately known as the PayPal mafia, he was an intern for two summers at the company before it sold and became a protege of one of them: Palantir's billionaire cofounder Peter Thiel.
Lonsdale is also known as the cofounder and first CEO of financial-planning software startup Addepar (where he's still the chairman).
All this before he turned 30.
He has since invested in dozens of startups as an angel investor and through the VC companies he founded. He's on the board of several high-profile startups, including Hyperloop One, which is working on the high-speed-transit system envisioned by Elon Musk.
When he agreed to this interview, there was one restriction: He wouldn't discuss details of either of the two big lawsuits that involved him, citing confidentiality. One involved Hyperloop One. The suit was brought by a cofounder and other employees who alleged company executives misused funds, violated California labor code, and threatened at least one employee by placing a noose on his desk seat. The company denied the allegations, and the suit was settled in November.
The other was the suit by his ex-girlfriend. But he was willing to discuss how that whole episode influenced his views of the world.
After his ex made her allegations, his alma mater, Stanford, barred him from campus. The woman was a student there and he had been an official "mentor" for a course on entrepreneurialism. Lonsdale reportedly presented Stanford with emails that he said helped verify his innocence, but it was only after The New York Times published its exhaustive story on the case that the Stanford investigator reversed course and the school lifted its ban.
Lonsdale is hardly what most people would consider disenfranchised. But the ordeal made him distrust authorities. He felt like his voice was being ignored, as if he was railing against the machine, which he says made him sympathize with what women have felt like over the years as they fought against institutional sexism.
"The whole experience gave me a lot of empathy for the women who had to deal with this in the past," he told me. "It was clear that few of the lawyers or other bureaucrats involved cared about things like truth or honor - they only cared about protecting the institution."
"It also gave me a new appreciation for the anger felt at how the system failed thousands of women who were just ignored or, worse, laughed at, in the past decades," he said. "All the recent rules and pressure from DC did was to sometimes flip who was treated unfairly. The entire situation can only be changed by strong leaders who care about honor."
On a personal level, the ordeal caused him to become warier of people.
"It's made me a lot more careful about who I let into my life and who I trust," he said. "I was very lucky that I met my now wife before then."
The toughest year
But Lonsdale said the fallout from the lawsuit wasn't the worst thing that ever happened to him. He went through another period that was rougher, he said, and in some ways it toughened him up to survive and thrive after his very bad, awful 2015.
His most difficult year was 2008, he said. His mom had passed away and he was having failures with projects at Palantir, which had been founded four years earlier. He had also overextended himself.
"I was having a tough time, and I was doing all these things. And there was some politics. Some people were threatened by me around Peter, so the whole thing was a really tough year," he said. "I did make a lot of mistakes. I probably shouted at people that didn't need to be shouted at."
When that year was over, he opted to start something new: Addepar. "It was clear it was time to replace myself and clear it was the right time to do it," he said. "Peter was very supportive and backed me on that. I had already reinvested all my shares and became an adviser to Palantir."
Palantir CEO Alex Karp was also OK with his move. If he hadn't been, Lonsdale would have stayed until he could have left on good terms.
"I do get bothered a little bit by the culture in Silicon Valley, where there's not as much loyalty and dedication to these things," he said. "I think in general it's really important to follow through on your responsibilities and transition at the right time. "
Right in a world of left
Lonsdale's was in some ways born and raised to confront conflict and win.
He grew up in Silicon Valley in the middle-class East Bay town of Fremont, where his parents stretched to afford their house and send their three boys to great schools.
But his family of three boys also had something else: an unrelenting drive to win.
"Our family is very, very competitive. But it's a fun and inspiring sort of competitive. It makes you proud of what you do, and makes you want to work hard, and do all your homework, so you can win," he said.
For instance, he credits his dad for training him to break a 20-year-old swim-team record in the breaststroke in grade school.
"I was the only one doing push-ups and pull-ups, because what 9-year-old kid does that?" he joked.
With his inner drive and his parents' coaching, Lonsdale and his brainy friends won chess championships on a team coached by his dad. He graduated valedictorian, had "mostly perfect test scores," and landed a coveted spot to attend Stanford University.
At Stanford, he joined the university's small group of right-wing students and its Libertarian paper, the Stanford Review.
"It's not as much about the politics as it was about being contrarian. Hopefully, I'm slightly more mature now, but I've always relished standing out from the crowd, standing up and disagreeing with everyone," he said. "If I had grown up in Arkansas, I would have joined up with the left-wing club."
A lot of this parallels the background of his billionaire mentor, Peter Thiel, who also grew up in Silicon Valley, was a chess genius, went to Stanford, and is a notorious contrarian and Libertarian. Thiel was a founder of the Stanford Review.
Although Lonsdale didn't know Thiel well when he worked as an intern at PayPal, that job helped him get an internship at Thiel's next company, a hedge fund, where he soon captured Thiel's attention.
"I actually hired people around me and I helped launch projects and I didn't realize at the time that that's not what interns did. I thought you just started building stuff, if you were there. To Peter's credit, he put up with it and didn't say, 'Who does this kid think he is?'" Lonsdale laughed.
These days, many people in Silicon Valley are upset at Thiel for his politics and his perceived power-mongering. For instance, Thiel helped elect Donald Trump, a deeply unpopular president in much of Silicon Valley, and remains his adviser. Thiel also secretly funded a lawsuit that bankrupted the Gawker news site.
Lonsdale isn't on board with all of Thiel's choices.
"I don't agree with him on a lot, but he's also a genius and someone who's a very good person to learn from about business," he said.
For example, being contrarian is "good for investing and entrepreneurship" because it helps people to "think differently," he said.
As for politics, Lonsdale still leans right but said, "I care a lot more about making sure we create opportunities and help the bottom of our society as one of our key duties, one of our highest duties."
His political activism comes in the form of founding startups, like OpenGov, which offers financial software to help governments manage taxes and share best practices.
Lonsdale credits Palantir's CEO Karp for helping him become more politically mellow. Karp studied philosophy under the University of Frankfurt's Jürgen Habermas.
"One of my biggest intellectual influences in my life was Alex Karp of Palantir," Lonsdale said, calling him " a very thoughtful person." From Karp, he saw "there's truth on both extremes, and if you are missing one side, you become a very lopsided person."
The secret to Palantir's secrecy
For all his antiauthority proclivities, Lonsdale's biggest success in tech is a company that was created for the purpose of helping governments conduct intelligence and spy work by sifting through oceans of data.
Palantir's roster of clients - which include the CIA and various other international agencies - and the company's reputation for secrecy have given it a veneer of mystery that sets it apart from the typical feel-good Silicon Valley startup.
This has led to an aura of suspicion about the company and the work it does.
But Lonsdale said Palantir's reputation for secrecy is simply an inherited quirk and not an indication of some sort of evildoing.
At first, the company was quiet because its roster of brilliant but geeky people were more focused on building the product and persuading rather secretive government agencies like the CIA, FBI, and M16 to use it, rather than broadly marketing it, he said.
And then the secrecy became ingrained as a cultural thing.
"At all these companies, when companies get so successful, they tend to enshrine their quirks," Lonsdale said. He cited Apple and its reputation for secrecy as an example.
But cultural secrecy no longer serves Palantir, Lonsdale believes. "I disagree with their PR strategy. I think they have a responsibility and should engage more," he said.
Accidentally saving his mother-in-law's life
After leaving Palantir altogether and vacating the CEO role at Addepar to become its chairman, Lonsdale has now moved on from his focus in his 20s as an entrepreneurial exec.
"There are people who are better managers than I am. I aspire to be a really good manager, but it's not my natural personality to do the same thing for 14 hours a day. I have a lot of different interests. I really like product and strategy and business strategy, and I think I'm not bad at it," he said.
That means he's involved in a dizzying number of companies, between his angel investments, 8VC, and his earlier VC investments, plus the boards of nonprofits, like Strive for College, which helps students apply to colleges. Although he says he sleeps six to seven hours a night, he says he's a borderline workaholic trying to balance his new life as husband and dad.
"I have a lot of responsibility. There's like this fantasy where you could sneak away to the beach instead," he said. "Right now that's on my mind. How do I make space?"
Still, he learned a big lesson about the value of his work when one of these companies literally saved his mother-in-law's life and possibly his wife's.
Last year, a few months before his wedding day, his fiancée, Tayler Cox, discovered she had a gene that indicated a high risk of cancer. She found out because Lonsdale had a genetic test laying around the house from a health-tech company backed by his previous fund.
"I had an extra test from this company I cared about. So my wife just did it on a whim, and she found out that she has this risk," he said. After that, she had her mom take the test. It came out positive for an ovarian-cancer gene. The mom and her doctor decided to remove her ovaries preventatively.
"And they go in and take them out and they find stage 3 cancer," he said. "Which is terrifying. Fortunately, we were able to get her surgery, get her chemo, and she seems to be in full remission right now. If we hadn't done that, we'd be losing her this year."
While Lonsdale had already been investing in health startups, he's now even more gung ho about the market.
And again, he said he can't help feel extremely fortunate.
"I'm a lucky guy to be in my position. I'm very lucky I really enjoy what I'm doing," he flashed that wide smile. "I'm a lucky guy."